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Maryland Governor Expected To Sign Fuel Tax Increase Legislation

Legislation passed late last week by Maryland lawmakers that would increase fuel taxes is expected to be signed by Gov. Martin O’Malley. Similar plans have been progressing in other states.

The legislation restructures the state’s fuel taxes and raises close to $4.5 billion dollars for transportation projects.

Each July the state’s fuel taxes would be recalculated based on the Consumer Price Index, a federal gauge used to measure inflation. It would also add 3% to the price of both diesel and gasoline. The first increase is expected to be around 4 cents. The rest of the increase would be phased in by 2016, adding another 13 to 20 cents per gallon, depending on its price and the level of inflation.

The legislation is similar to that signed into law in Virginia recently, in which a new wholesale tax is being levied on fuel. Fuel taxes in both states could go even higher if Congress does not pass legislation allowing tax collections on Internet purchases.

In an interview with The Washington Post, O’Malley conceded increasing taxes is not popular but said the move would result in the creation of more jobs and improve the state’s infrastructure.

Meantime, in New Hampshire legislation passed the House last week, and is awaiting consideration in the Senate, that would raise diesel and gasoline taxes by 12 cents per gallon, over a phased in period. It faces a likely defeat, because some Republicans in the GOP controlled chamber have pronounced it dead upon arrival.

Proponents of the tax increases in all three states say they are needed to make up for transportation funding shortfalls, including for Interstate expansion and repair projects, while opponents, including some in trucking say they will put extra costs on their businesses and cause consumers purchasing power to drop, resulting in less freight to haul.